SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

( X ) Annual Report Pursuant to Section 13 or 15 (d) of the Securities  Exchange
Act of 1934 For the fiscal year ended  December 31, 1995 ( )  Transition  Report
Pursuant to Section 13 or 15(d) of the  Securities  Exchange Act of 1934 For the
transition period from ______________ to _______________

Commission file Number 0-11883

                            Telebyte Technology, Inc.
             (Exact name of registrant as specified in its charter)

             Nevada                                11-2510138
  (State or other jurisdiction of               (I.R.S. Employer
   incorporation or organization)              Identification No.)

                   270 Pulaski Road, Greenlawn, New York 11740
                   (Address of principal executive) (Zip Code)

Registrant's telephone number, including area code (516) 423-3232

Securities registered pursuant to Section 12(b) of the Exchange Act:
                                                       None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.01 per share
                                (Title of class)

Check whether the  registrant (1) filed all reports to be filed by Section 13 or
15(d) of the  Securities  Exchange Act of 1934 during the past 12 months (or for
such shorter  period that the  registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
                               __X__ Yes _____ No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. ( X )

The registrant's revenues for its most recent fiscal year were $3,758,953.

The aggregrate  market value of the voting stock held by  non-affiliates  of the
registrant at March 14, 1996 was $771,482.

The  number  of  shares  of  common  stock  outstanding  at March  14,  1996 was
1,501,566.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None
Transitional Small Business Disclosure Format (check one):  Yes _____; No  __X__

<PAGE>

                                     PART 1

Item 1.           BUSINESS

Telebyte Technology, Inc. (herein either the "Company" or "Telebyte ") designs,
manufactures, and markets electronic data communications products.  The
Company's operations are in a single business segment and, except for sales to 
foreign distributors, the Company does not conduct any foreign operations.
The Company was formed as a New York corporation in 1983 and  re-incorporated 
in Nevada in 1987.

INTRODUCTION

The Company's  electronic data  communications  equipment is used principally to
provide  connectivity  solutions  and  maintain  data  communications  networks.
Telebyte's products  effectively link computers to other computers as well as to
their  components in a manner that enables them to operate as a complete system.
An example of growing  areas are  process  control  systems,  computerized  time
clocks,  scales,  and bar code reading  equipment.  The Company's five principal
data  communications  product  categories  are  short  haul  modems,   interface
converters,  multiplexers,  surge/lightning  protectors, and data communications
test  equipment.  The  Company  also  manufactures  and sells a variety  of data
communications switching equipment and accessories.

In the large data  communication  marketplace,  Telebyte  focuses on the area of
"premises  communication"  or local  networks.  Telebyte  addresses the needs of
customers  that have  computer  systems  with data  communications  applications
including distances whose range is from a few feet to a few miles.  Accordingly,
Telebyte's  products would be used in data communication  networks in facilities
such as industrial plants, factories, high rise office buildings, or campus like
environments. The transmission media used in this environment are "twisted pair"
copper wire and/or fiber optic cable.  Fiber optic based  products  represents a
growing segment of the Company's product line.

The Company's more than 140 products  cover nearly all of the devices  necessary
to establish a premises data  communications  network.  The Company endeavors to
maintain a broad  product line by developing  both improved  versions of current
products  and new  products  such as fiber  optic  short haul  modems,  advanced
interface converters and multiplexers.

The  Company's  product  line grew by twelve new products  during 1995.  Several
older products were discontinued during the year.

BUSINESS DEVELOPMENTS FOR 1993, 1994 AND 1995

In 1993,  Telebyte delivered a large quantity of short haul modems to AT & T and
Quotron and interface  converters to the Department of Defense. The introduction
of the Model 904 PC Notebook Comscope continued the growth of the Company's test
equipment  with a full featured  protocol  analyzer for all PC's, but especially
the growing  segment of notebook  PC's.  Also during 1993,  under  contract from
Accurate Automation,  a Chattanooga,  Tennessee firm, Telebyte began development
of a neural  network  processor  that can  reside in a PC.  The  neural  network
processor  dramatically  increases  the power of the PC when  applied to certain
problems which involve  pattern  recognition or learning an envrionment in order
to make intelligent decisions, much the same as the human brain learns. Accurate
Automation and Telebyte will share the market with Telebyte having the rights to
the PC market.  

<PAGE>


During 1994 the Company  expanded its product  line through an OEM  relationship
with a Florida  based  company to resell,  under the  Telebyte  name, a group of
switching  products.  The  Company's  product  catalog was mailed in November of
1994. Neural network processor  development was completed and initial orders for
the Company's Model 1000 Neuro Engine  neurocomputer and neural network modules,
Model 1001, were received in the third quarter with initial deliveries beginning
in late December of 1994. New product development in 1994 resulted in eleven new
product introductions.  In addition,  several custom products were developed for
customers such as Trane Corp., VONS Supermarkets and Telegenix.

In 1995 Telebyte  devoted  efforts to redesign a significant  number of its core
short haul modems and  interface  converters  to include a new display  feature.
This display,  incorporating  liquid crystal  technology and called  DataSpy(R),
provides  a window  onto the data  link  thereby  simplifying  installation  and
maintenance of the network. DataSpy(R) is a registered trademark of Telebyte. In
addition,  Telebyte has submitted a patent application to cover this feature. It
is expected that this feature will act as a significant  product  differentiator
between Telebyte and its competitors.

1995 saw large  numbers of interface  converters  shipped to Intel and AT & T. A
system  integrator,  working for the U.S.  government,  took delivery of several
thousand  modem abort timers.  Also during 1995 the Company  decided to exit the
video market which had become  flooded with  commodity  products from Asia. As a
result of this competition margins eroded quickly and therefore the products did
not meet Telebyte's criteria for gross margin.

Many other companies availed  themselves of Telebyte's ability to design special
products or modify existing  products.  This product  "design-in" is expected to
produce  additional  volume sales as  production  begins for the programs  which
include these special Telebyte products.

PRODUCTS

Telebyte's  products  compete  in  five  different  application  areas  of  data
communications  networks.  These are: Short Haul Modems,  Interface  Converters,
Multiplexers, Test Equipment, and Lightning Protection.

Short haul modems differ from those modems which most people are familiar  with,
those that operate over the dial-up telephone network.  Short haul modem devices
provide the link over  dedicated  wires or optical  fibers among  computers  and
accessory equipment such as terminals, printers, badge readers, scales, bar code
readers, and other computer controlled machines. Short haul modems are also used
in establishing  communications  between micro or personal computers and mini or
main frame  computers.  Thus, the role of the short haul modem has been expanded
from  coupling  terminals  to a central  processing  unit to creating  extensive
computer  to  computer  networks.  The  Company's  short haul modem  devices are
designed to provide data  communications  links  ranging from  relatively  short
distances  to several  miles.  The Company  manufactures  and sells a variety of
short haul  modems  designed  for  particular  applications  and the  electrical
environment  of the user.  For  example,  Telebyte has three types of short haul
modems, with transmission capabilities that are suited for (i)factories or heavy
manufacturing  operations,  (ii)light manufacturing,  and (iii)industrial office
areas or general office locations. Due to technological changes and innovations,
the Company has to develop new short haul modem products on a continual basis to
meet its customers'  technical  requirements  and to remain  competitive in this
market. Short haul modems represented 30% of Telebyte's net sales in 1995.

Interface  converters  transform the characteristics of the electrical interface
of one device to enable it to become compatible with the electrical interface of
another. As a result, a data communications network


<PAGE>



can be  established  or  expanded  among  data  processing  and  other  computer
equipment which otherwise would be unable to transmit or receive data. Interface
converters represent 40% of Telebyte's revenue in 1995, and because the industry
continues to develop new interface  standards,  the Company anticipates that the
market will require greater varieties of interface converters, thereby expanding
the available market for existing  products and creating  opportunities  for new
products.  Telebyte's line of interface  converters are available in most of the
configurations  now  required by the market and includes  programmable  devices.
Where the appropriate  opportunity presents itself, the Company will manufacture
custom interface converters to meet a particular customer's requirements.

No other product areas had sales that exceeded 10% of net sales in 1995.

The Company's  multiplexers  allow data from a number of different devices to be
communicated  simultaneously  on the same circuit or channel.  Thus,  Telebyte's
local area multiplexers perform a task similar to its short haul modems,  except
that a single communications link can support many users. Telebyte's multiplexer
products  allow  simultaneous  data transfers over distances of up to 8,000 feet
for wire or 6,600 feet over fiber.

Data communications test equipment typically is used by maintenance personnel to
analyze and test the integrity of data communications networks.  Telebyte's test
equipment  product line includes  "plug-in"  printed circuit boards for use with
IBM personal computers and compatible clones.  These items are supplied with the
software  necessary to enable the personal  computer  user to monitor or emulate
the data line with other devices in the data communications  network.  This test
equipment  product assists in maintenance  because it can rapidly  identify open
leads,  missing  signals and other  errors,  and  intermittent  problems  can be
tracked  and stored in memory for later  analysis.  A similar  product  has been
developed for the notebook and portable computer.

Another  product group in the test equipment  segment is an Integrated  Services
Digital  Network  ("ISDN")  wireline  simulator for basic rate ISDN and T1 (high
speed data  services  offered by  telephone  companies)  rates.  This product is
applicable  to  engineering   product  development  and  evaluation  efforts  to
determine the  character  and  limitations  of certain data  communications  and
transmission  devices.  ISDN is a growing  service  being  offered by  telephone
companies  around the world to dramatically  increase the rate at which data can
be transmitted over the dial-up telephone network. The product can simlulate the
operating  characteristics  of a  telephone  cable  circuit,  such as  frequency
response and propagation  delay, at various  frequencies over various distances.
The product  thus  permits the user to simulate a local  telephone  loop under a
variety of conditions. In addition to the normal single piece buyer, the Company
has a major user of these devices that  continues to buy them,  in quantity,  as
their sales of HDSL modem products increase.

Telebyte manufactures and sells a number of lightning and surge protectors which
prevent  damage  to data  communications  equipment  that can be  caused by high
voltage surges and transients,  ground  currents,  and other  lightning  induced
electrical disturbances encountered on data communication circuits.

The Company generally  manufactures and maintains an inventory of products based
upon historical  levels of demand.  Most of its products are standard or catalog
items.  On occasion,  the Company  produces  custom  products  manufactured to a
customer's specifications or for a specific application.

The  Company  has not  experienced  a shortage  of  manufacturing  materials  or
components,  and it  purchases  raw  materials  and supplies  from  domestic and
foreign  sources.  The  Company  does not depend upon any  particular  source of
supply, and not more than 10% of the purchases were from a single supplier.  Raw
material and supplies are readily available from various sources.


<PAGE>


The research and new product development budget for 1996 is $325,000 compared to
approximately  $282,000 and $249,000 spent in 1995 and 1994,  respectively.  The
cost  of  research  and  development  is not  borne  directly  by the  Company's
customers.

Federal,  state, and local  environmental  laws and regulations have no material
impact on Telebyte or its business.

SALES AND MARKETING

The Company markets its data communications  products by promotional  activities
such as telephone  sales,  paid  advertising,  press releases,  post card decks,
direct mail campaigns,  and  participating  in trade shows.  Telebyte  currently
conducts its sales and marketing  efforts  through an in-house sales staff and a
network of  distributors.  Domestically,  the Company uses 17  distributors  and
there are 34  international  distributors.  Some  products are marketed  through
other catalog  distributors.  Foreign sales represented  approximately  11.8% in
1995, 12.6% in 1994 and 11.6% in 1993 of net sales.

The Company  sells to four market  groups,  consisting  of  end-users,  domestic
dealers  and  distributors,  foreign  dealers  and  distributors,  and  original
equipment  manufacturers.  End users are serviced by direct  in-house  telephone
support.  All  distributors  purchase at a discount  from the  established  list
price.  Domestic distributors do not have an exclusive territory whereas foreign
distributors are assigned  specific  territories,  usually their country,  on an
exclusive basis. Internal sales representatives  service exclusive customers and
are paid commissions on all sales from those customers. During 1995 the internal
sales  representatives  sales  plan was  changed  from  exclusive  territory  to
exclusive  customer.  This allows  greater  flexibility  in recruiting new sales
representatives.

 The Company does not depend upon sales to a single  customer or a limited group
of customers and there were no sales to a single  customer during the last three
years exceeding 10% of net sales.  Sales of products to the U.S.  government are
not subject to  renegotiation of profits or termination of contracts at the U.S.
government's  election.  The  Company's  sales are not  materially  affected  by
seasonal factors.

COMPETITION

There are a significant number of companies engaged in manufacturing and selling
data  communications  equipment  in  the  same  markets  as the  Company.  Since
Telebyte's product line is diverse,  it is difficult to define and enumerate its
competition.  As a general matter,  there are  competitors  which are larger and
better  established  than Telebyte,  many with  technical and capital  resources
which the Company does not possess and more  well-developed  sales and marketing
capabilities.

The Company's principal competitors are RAD Data Communications,  Ltd. (which is
based in Israel with local offices in New Jersey),  Black Box (with headquarters
based in Pennsylvania), and Patton Electronics (based in Maryland), and a number
of small  companies.  Telebyte  competes  with these  companies  on the basis of
quality,  price,  breadth of product line,  sales and marketing  capability  and
technological  support, and innovation.  The Company relies principally upon the
price/performance  ratio of its  converter,  multiplexer,  and surge  protection
products.  Telebyte  also  attracts  market  share by its ability to fill orders
quickly and provide  technical  support to its  customers.  The Company does not
have  a  significant   market   presence  with  its  test   equipment  and  data
communications accessories.


<PAGE>


The Company does not rely upon  patents,  registered  trademarks  or licenses to
give it a competitive advantage.

EMPLOYEES

As of  December  31,  1995,  the Company  had 35 full time  employees.  Of these
employees,  two  are  executives,  six  are  in  sales,  four  in  research  and
engineering, four in administration, and the balance in manufacturing, shipping,
and related  activities.  The Company uses  subcontractors and part-time help to
support its current operations. None of the employees are represented by a labor
union, and the Company considers its employee relations to be good.

BACKLOG

At December 31, 1995, the Company's backlog was $270,533 all of which the
Company expects to fill in fiscal 1996.  Comparable backlog at December 31, 1994
was $331,847.

Item 2.           PROPERTIES

Telebyte's executive office, plant, and manufacturing  facility are located in a
20,000 square foot building on 3.2 acres,  at 270 Pulaski Road,  Greenlawn,  New
York 11740.  The land and  building  were  purchased by the Company in September
1985. The Company  refinanced the existing mortgage in May 1988 and the property
now secures a mortgage  loan  payable on a fully  self-amortizing  basis over 20
years. Interest under the mortgage is based on 2.75% over the bank's prime rate,
however,  such rate  cannot be less  than 10% and will be  recalculated  June 1,
1997. The oustanding  principle balance of the mortgage loan, as of December 31,
1995, was $1,067,501.  Managment believes that all of its properties, plant, and
equipment are well maintained and adequate for its requirements.

Of the 20,000  square feet the Company has leased 5,000 square feet to a tenant.
Management  believes  that  Telebyte's  existing  manufacturing  facilities  are
sufficient to support its present needs and anticipated  growth, and the Company
does not plan any siginificant capital expansion of its plant in Greenlawn.


Item 3.           LEGAL PROCEEDINGS

There are no material pending legal  proceedings to which the Company is a party
or by which its properties are subject.


Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.


<PAGE>

                                     PART II


Item 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Until  September 2, 1992, the Company's  common stock was listed on the National
Association of Securties Dealers Automated Quotation System ("NASDAQ") under the
symbol  "TBTI."  After  that date the  stock  was moved to the Over The  Counter
Bulletin Board since it no longer met the  requirements of NASDAQ's  minimum bid
price. The Bulletin Board is a market maker driven exchange.

The following  table sets forth the high and low bid prices for the common stock
for  each  fiscal  quarter  during  1995 and 1994 as  reported  by the  National
Association of Securities  Dealers,  NASD. The bid and ask prices for the common
stock on March 14, 1996 were $3/4 and $7/8 respectively.



                          1995                    1994
                          ----                    ----

                    High       Low           High        Low

First Quarter        7/8       5/8          $1 1/4       1/2

Second Quarter     2 1/4     1 1/8             7/8       1/2

Third Quarter      2 1/8     1 1/8             3/4       1/2

Fourth Quarter     1 1/4       5/8             3/4       1/2


The above quotations  reflect  inter-dealer  prices,  and may not include retail
mark-up,  mark-down or  commissions  and may not  necessarily  represent  actual
transactions.

At March  14,  1996,  there  were  approximately  339  holders  of record of the
Company's  common  stock.  Most of the  shares of the  common  stock are held in
street name for a larger number of beneficial owners.

To date,  Telebyte has not paid a cash  dividend.  The payment and amount of any
future  dividends  will  necessarily   depend  upon  conditions  then  existing,
including  the  Company's  earnings,   financial   condition,   working  capital
requirements,  and other  factors.  The Company does not  anticipate  paying any
dividends in the foreseeable future.


Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

In 1995,  the Company  invested  $112,161 in property and  equipment,  which was
financed through  internally  generated funds and $26,257 of long term debt. The
statements of cash flows indicates that the Company  generated  $320,050 in 1995
compared to $25,049 in 1994 in cash from  operations.  The increased  cash flows
from  operations  resulted  from reduced  inventory  levels and  utilization  of
prepaid expenses.


<PAGE>



The Company has made capital  expenditures  in 1995  totaling  $112,161 of which
aproximately  $32,000 to replace its aging phone  system and install a new sales
tracking system,  $57,294 for computer  equipment and related software,  $20,407
for manufacturing equipment and $1,955 for engineering equipment.

Working capital increased as of December 31, 1995 by  $14,330 to  $1,891,834,
compared with $1,877,504 at December 31, 1994.   The current ratio decreased to
7.0 to 1 at December 31, 1995, compared with 8.5 to 1 at December 31, 1994.

The Company has renewed  its line of credit  which  expires in July 1996,  based
upon  eligible   accounts   receivable,   raw  materials,   and  finished  goods
inventories,  for a maximum of $1,000,000 from Merrill Lynch. The line of credit
is  available  for general  working  capital  purposes  and to finance  business
growth. As of December 31, 1995, there was no outstanding  balance due under the
line of credit.  During  the past  three  years the  Company's  operations  have
generated sufficient working capital to sustain its current levels of operations
and the  Company  believes  that cash  generated  by the  Company's  operations,
current cash and cash equivalents, and the line of credit should supply the cash
resources to meet its cash needs for the next twelve months.  The Company has no
committments for any major capital expenditures in 1996.

RESULTS OF OPERATIONS

FISCAL 1995 COMPARED TO FISCAL 1994

Sales for the year ended December 31, 1995 decreased by 0.8% to $3,758,953.  The
sales decrease was primarily a result of the  withdrawal  from the video product
area. Sales in the video product area decreased by aproximately  $23,000 in 1995
from 1994.

An analysis of the gross  margin for 1995 reveals that it was 55% as compared to
54% for 1994.  This was  primarily  a  function  of product  mix.  Cost of sales
decreased by $60,196 reflecting the decrease in sales generally and not the cost
of components or other costs.

Selling,  general, and administrative costs increased by $ 137,462. The increase
resulted  primarily  from  increased  promotional  expenses of  $103,000  and an
increase in legal expense of $29,000.

Research and development  increased in 1995 to $282,172,  or 7.5% of sales, from
$248,993,  or 6.5% of  sales  in  1994.  The  increase  reflects  the  Companies
continued commitment to product development.

Interest  expenses of $115,081 in 1995 decreased to 3.1% of sales as compared to
$133,283, or 3.5% in 1994.

Interest income  increased by $ 7,834.  The increase in 1995 reflects the higher
levels of cash  generated.  from operating  activities.  In 1995 the Company had
rental  income of  $48,195,  compared  to $36,146 in 1994.  For 1996 the Company
expects rental income of approximately $48,000.

The Company  generated net income of $101,592 or $0.07 per share, 2.7% of sales,
compared to $281,971 or $.18 per share,  7.4% of sales,  for 1994. This decrease
reflects  the  higher  selling,  general  and  administrative,  promotional  and
research and  development  costs  incurred in 1995 and the fact that in 1995 the
Company did not have the $75,000 income tax benefit it had in 1994.

The Company  believes that the market  indications  for the data  communications
market and for the Company's  products will increase for 1996; however there can
be no assurance  that this will happen.  The Company has  reorganized  its sales
force from an exclusive  territorial  concept to an exclusive  customer concept.
With this change the Company has added two additional internal  salespersons and
its


<PAGE>



first external  salesperson  based in Atlanta,  GA. The Company has  implemented
these changes in an effort to increase its sales.


EFFECT OF INFLATION

During the five year period  ending  December 31, 1995,  the Company was able to
decrease  its costs of sales of its  products  to  compensate  for the effect of
inflation  on the  cost of  components.  This was  accomplished  by  changes  in
manufacturing  methodology  and the  purchase of capital  equipment  to increase
manufacturing efficiency.



Item 7.           FINANCIAL STATEMENTS

See "Index to Financial Statements" beginning on page F-1 below.


Item 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING
                  AND FINANCIAL DISCLOSURES

Not applicable.


<PAGE>


                                    PART III


Item 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; 
             COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The following table sets forth certain information concerning Company's officers
and directors.  Telebyte's  directors are elected to serve until the next annual
meeting of shareholders or until their successors are elected and qualified. The
executive  officers are appointed annually by, and serve at the pleasure of, the
Board of Directors.

Name, age, and positions       Business experience during past          Director
held with the Company          five years and principal occupation      since

Joel A. Kramer, age 58,        Mr. Kramer has served as                 1983
President and Chairman of      President of the Company
the Board of Directors         since August 1983, and
                               Chairman of the Board since 
                               February 1989.

Kenneth S. Schneider, Ph.D.,   Dr. Schneider has served as              1983
age 50, Vice President,        Treasurer and Vice President,
Treasurer, Secretary, and      of the Company since August
Director                       1983; and he was elected
                               Secretary in March 1991.  Dr.
                               Schneider is a senior member
                               of the Institute of Electrical 
                               and Electronic Engineers.

Keith B. Wiley, age 40,        Mr. Wiley started his own                1983
Director                       investment banking firm in
                               November 1989. From 1987 to
                               November 1989 he served as a
                               Vice  President of  Goldome 
                               Strategic  Investments, Inc. 
                               From 1982 to 1987 Mr. Wiley 
                               was a senior investment officer
                               and vice president of Rand
                               Capital Corporation, a venture 
                               capital investment firm.

SECTION 16 COMPLIANCE

Based upon a review of copies of the forms  required to be filed  under  Section
16(a) of the  Securties  Exchange  Act of 1934 or written  representations  from
officers and directors,  the Company  believes all officers and  directors,  and
greater than ten percent owners of the Company's common stock have complied with
Section 16(a.)


<PAGE>




Item 10.     EXECUTIVE COMPENSATION

The following table sets forth the cash  compensation paid or accrued during the
last three  fiscal  years to the  executive  officers of the Company  whose cash
compensation exceeded $100,000.  The table includes Company contributions on the
officer's behalf to the Company's 401(k) Plan.


<TABLE>
                           Summary Compensation Table

                                  Annual Compensation                    Long-Term Compensation 
                                                                        Awards                   Payouts
<CAPTION>

      (a)          (b)       (c)       (d)         (e)            (f)            (g)               (h)           (i)
    Name and                                   Other Annual    Restricted        Stock          Long-Term        All Other
   Principal       Year    Salary     Bonus    Compensation   Stock Awards   Options/SARs    Incentive Payout   Compensation
    Position
                             ($)       ($)         ($)           (No.)          (No.)              ($)              ($)
<S>               <C>     <C>        <C>        <C>                <C>          <C>             <C>                <C>           
Joel A. Kramer    1995    $105,497   $13,300    $11,367(1)         0            5,000           $9,281(2)          $2,997
President, CEO    1994     $97,968   $11,500    $12,697(1)         0            5,000           $9,281(2)          $2,948
  & Director      1993     $95,934   $6,000     $10,768(1)         0              0             $9,281(2)            0

  Kenneth S.      1995     $95,153   $9,000     $6,619(1)          0            5,000           $4,080(2)          $2,668
   Schneider
   Sr. V.P.       1994     $90,394   $6,200     $6,678(1)          0            5,000           $4,080(2)          $2,858
 Sales, Sec.,
   Treas. &       1993     $86,938   $4,400     $6,759(1)          0              0             $4,080(2)            0
   Director

<FN>
(1)      Commissions - Mr. Kramer received a 2.5% commission of net sales to
customers not located within the United States. Mr.Schneider received a 0.5% 
commission of net sales to customers located within the United States. The 
amounts paid are set forth above under the caption entitled "Other Annual
Compensation".  
(2)      Deferred Compensation - see Long-Term Incentive Plans Table below.
</FN>
</TABLE>


            
<TABLE>

             Long-Term Incentive Plans - Awards in Last Fiscal Year
        
                                             Estimated Future Payouts under Non-Stock Price-Based Plans
<CAPTION>
                      Number of Shares,   Performance or Other
                       Units or Other         Period Until          Threshold          Target            Maximum
                                               Maturation
        Name             Rights (#)            or Payout             ($ or #)         ($ or #)           ($ or #)
<S>                      <C>                 <C>                    <C>              <C>                <C>                      
Joel A. Kramer                               June 11, 2002          $26,667(1)       $26,667(1)         $26,667(1)
   Pres.,CEO & Director

Kenneth S. Schneider                         April 16, 2010         $26,667(1)       $26,667(1)         $26,667(1)
   Sr.V.P. Sales, Sec.,
   Treas. & Director

<FN>
(1) In 1990 the Company entered into deferred  compensation  agreements with key
officers,  pursuant  to which  the  officers  will  receive  a  defined  amount,
approximately  30% of their  1990 base  salary,  each year for a period 10 years
after reaching age 65. The deferred  compensation  plans are funded through life
insurance  and  are  being  provided  for  currently.  The  expense  charged  to
operations in 1995 for such future  obligations was  $13,361($9,281  and $4,080,
for Joel Kramer and Kenneth Schneider, respectively).
</FN>
</TABLE>

  

 

<TABLE>
                   Aggregate Option Grants in Last Fiscal Year
<CAPTION>
                                                 % of Total Options         Exercise or
                           Number of Options    Granted to Employees         Base Price             Expiration
         Name                   Granted          in Fiscal Year 1995           ($/Sh)                  Date
                                   -
 <S>                           <C>                      <C>                   <C>                    <C>                        
 Joel A. Kramer                5,000(1)                 33.3%                 $2.04(2)               6/24/2005
 Kenneth S. Schneider          5,000(1)                 33.3%                 $2.04(2)               6/24/2005


<PAGE>

<FN>
(1)   All such options are currently exercisable.
(2)   Based upon the fair market value of the Company's Common Stock on the date
      of grant.
</FN>
</TABLE>



The following  table sets forth  information  concerning  each exercise of stock
options  during fiscal 1995 by each of the named  executive  officers and fiscal
year-end value of unexercised options:


Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values


<TABLE>
<CAPTION>
                                                                             Number of         Value of Unexercised
                           Number of Shares             Value          Unexercised Options at  In-the-Money Options
         Name            Acquired on Exercise       Realized ($)         December 31, 1995     at December 31, 1995
                                                                                                        (1)
   <S>                             <C>                    <C>                <C>                       <C>                     
   Joel A. Kramer                  0                      0                  10,000 (2)                0 (3)
   Kenneth S. Schneider            0                      0                  10,000 (2)                0 (3)

<FN>
(1)   Calculation based upon the average of the high and low bid prices of the 
Company's Common  Stock from the National Quotation Bureau on December 30, 1995.
(2)   All such options are currently exercisable.
(3)   All such options have exercise prices greater than the value of the 
Company's Common Stock on December 30, 1995.
</FN>
</TABLE>

COMPENSATION PLANS AND OTHER COMPENSATION

The Company adopted a Stock Option Plan (the "1993 Plan") under which options to
purchase  100,000 shares of the Company's common stock, par value $.01 per share
have been reserved.  As of December 31, 1995, there were 70,000 shares available
for  grants  under the 1993 Plan.  Pursuant  to the 1993  Plan,  the  Company is
permitted to issue  incentive  stock  options  ("Incentive  Stock  Options") and
non-qualified  stock  options.  Incentive  Stock Options under the 1993 Plan are
intend to  qualify  for the tax  treatment  accorded  under  Section  422 of the
Internal Revenue Code of 1986, as amended (the "Code.")

All  directors,  officersor  other key  employees of the Company are eligible to
participate  in the 1993  Plan.  The 1993 Plan is  administered  by the Board of
Directors of the Company, which, to the extent it shall determine,  may delegate
its power with  respect to the  administration  of the 1993 Plan to a  committee
consisting of not less than three directors.

Under the 1993 Plan, Incentive Stock Options to purchase shares of the Company's
common  stock  shall not be granted for less than 100 percent of the fair market
value of the common  stock on the date the  Incentive  Stock  Option is granted;
provided,  however, that in the case of an Incentive Stock Option granted to any
person  then  owning  10  percent  of the  voting  power of all  classes  of the
Company's  stock,  the purchase  price per share subject to the Incentive  Stock
Option may be not less than 110 percent of the fair market value of the stock on
the date of the grant of the option. Non-qualified stock options to purchase the
Company's  common stock are granted at prices  determined by the Company's Board
of Directors.

Options  under  the Plan may not have a term of more  than 10  years;  provided,
however,  that an Incentive  Stock  Option  granted to a person then owning more
than 10 percent of the voting  power of all classes of the  Company's  stock may
not be exercisable  more than 5 years after the date such option is granted.  In
addition, the aggregate fair market value,  determined at the time the option is
granted,  of the  stock  with  respect  to which  Incentive  Stock  Options  are
exercisable  for the first time by an  employee in any  calendar  year under the
1993 Plan may not exceed $100,000.

Options were granted for 15,000  shares to executive  officers and  directors of
the Company  during the year ended  December 31, 1995 with an exercise  price of
$2.04,  which was 110% of the fair market  value of the  Company's  stock on the
date of the grant. No other options were granted or exercised during 1995.

<PAGE>



The Company's 1983 Stock Option Plan  terminated in 1994. No executive  officers
or directors have any outstanding options under the 1983 Stock Option Plan.

The Company has an informal bonus plan in which officers and other key personnel
participate.  The  bonus  award,  if any,  is  fixed  annually  by the  Board of
Directors. Bonuses were allocated and paid to executive officers under this plan
during fiscal 1995 and shown on the foregoing Summary Compensation Table.

The Company  maintains a deferred  compensation plan under Internal Revenue Code
Section  401(k.)  All  employees  are  eligible  to  participate;   the  Company
contributes  50% of the first 2% deferred by the  employee.  Each  employee  can
contribute  between 2% and 15% of his annual salary.  Contributions  in calendar
year 1995 cannot  exceed  $9,240.  Benefits are 100% vested and are payable upon
the employee's death,  disability,  retirement,  termination,  and under certain
financial  circumstances.  At December 31, 1995,  $1,987 was  contributed to the
plan for officers.  All  contributions are reflected in the salary column in the
Summary Compensation Table.

Except for life and medical  insurance  benefit  programs which are available to
all employees, the Company has no other compensation plans.

Outside  directors receive an annual fee of $2,500, in addition to reimbursement
of expenses for attending each meeting.


Item 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of December 31, 1995 information
concerning (i) the shares held by each person or group known to own beneficially
more than 5% of the  outstanding  shares of common  stock,  (ii) shares owned by
directors  and (iii) the shares owned by all  directors and officers as a group.


Name and Address of              Number of Shares            Percent of
Beneficial  Owner                Beneficially Owned          Class 

Kenneth  S.  Schneider           294,538 (1) (2)             19.5% 
270  Pulaski  Road
Greenlawn,  NY 11740

Joel A.  Kramer                  262,996 (2) (3)             17.4% 
270  Pulaski  Road
Greenlawn, NY 11740

Keith B. Wiley                    10,100 (2)                  (4) 
270 Pulaski Road 
Greenlawn, NY 11740  

All officers and directors
as a group (3 in  number)        567,634                      38%

(1)  Includes 1,500 shares owned by Dr. Schneider as custodian for his 
     minor children.
(2)  Includes 10,000 shares issuable upon the exercise of stock options
     granted under the Company's  1993 Stock Option Plan. 
(3)  Includes  2,361 shares
     owned of  record  by Mr.  Kramer's  children. 
(4)  Less  than 1%.  


<PAGE>


Item  12.  CERTAIN  RELATIONSHIPS  AND RELATED  TRANSACTIONS

None.

Item 13.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

3(a)The  Company's  Certificate of  Incorporation  under the State of Nevada was
filed  as an  Exhibit  with  the  Proxy  Statement  filed  in June  1987  and is
incorporated by reference herein.

3(b)The By-laws of the Company as a Nevada  corporation were filed as an Exhibit
on Form 8-K in third quarter of 1987 and are incorporated by reference herein.

10(a)The  Company's  1993  Stock  Option  Plan was  filed as an  Exhibit  to the
Company's definitive 1994 proxy statement filed in May 1994, and is incorporated
by reference herein.

10(b)Commercial  mortgage and consolidation agreement dated May 25, 1988 between
Home Federal Savings Bank and Telebyte Technology,  Inc., filed as an Exhibit to
the Company's 1988 Annual Report on Form 10-K and is  incorporated  by reference
herein.

10(c)Deferred  compensation  agreements dated December 12, 1990 between Telebyte
Technology,  Inc.  and Joel A.  Kramer  and  Kenneth S.  Schneider,  filed as an
Exhibit to the Company's 1990 Annual Report on Form 10-K and is  incorporated by
reference herein.

10(e)$1,000,000  Revolving Line of Credit  agreement dated June 23, 1994 between
Merrill Lynch and Telebyte  Technology,  Inc.and was filed as an exhibit on Form
10-KSB for the year ended  December  31, 1994 and is  incorporated  by reference
herein.  This Line of Credit was extended for an additional year ending June 30,
1996.

(b) REPORTS ON FORM 8-K

There were no reports on Form 8-K filed during the fourth quarter for the fiscal
year ended December 31, 1995.



<PAGE>


                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the  Registrant  had duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

TELEBYTE TECHNOLOGY, INC.



By:      __________\s\_________________
         Joel A. Kramer, President and
         Chairman of the Board
         (Principal Executive Officer and Financial Officer)


Date:    March 28, 1996


In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the following  persons on behalf of the  Registrant,  and in the
capacities and on the dates indicated.


March 28, 1996    __________\s\_____________
Joel A. Kramer, Director


March 28, 1996    __________\s\_____________
Kenneth S. Schneider, Director



March 28, 1996    ___________\s\____________
Keith B. Wiley, Director





<PAGE>



                            Telebyte Technology, Inc.

                          INDEX TO FINANCIAL STATEMENTS






                                                                               
Report of Independent Certified Public Accountants            F-2

Balance Sheets as of December 31, 1995 and 1994               F-3

Statements of Earnings for the years ended
   December 31, 1995 and 1994                                 F-5

Statement of Shareholders' Equity for the years
   ended December 31, 1995 and 1994                           F-6

Statements of Cash Flows for the years ended
   December 31, 1995 and 1994                                 F-7

Notes to Financial Statements                                 F-8




<PAGE>


                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS




To the Board of Directors and Shareholders of
     Telebyte Technology, Inc.


We have audited the accompanying balance sheets of Telebyte Technology,  Inc. as
of  December  31,  1995  and  1994,  and the  related  statements  of  earnings,
shareholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Telebyte Technology, Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended,  in  conformity  with  generally  accepted  accounting
principles.





GRANT THORNTON LLP


Melville, New York
March 1, 1996



<PAGE>


                            Telebyte Technology, Inc.

                                 BALANCE SHEETS

                                  December 31,






                                     ASSETS             1995          1994
                                                      --------      --------

CURRENT ASSETS
    Cash and cash equivalents                       $  609,466     $  439,377
    Accounts receivable, net of allowance of
       $15,000 in 1995 and $20,000 in 1994             464,688        411,743
    Inventories                                        963,904      1,052,057
    Prepaid expenses and other                          87,354        145,882
    Deferred income taxes                               80,000         80,000
                                                    ----------     ----------

         Total current assets                        2,205,412      2,129,059




PROPERTY AND EQUIPMENT - AT COST,
    less accumulated depreciation                    1,198,462      1,158,294








OTHER ASSETS                                            47,552         51,752
                                                    ----------     ----------

                                                    $3,451,426     $3,339,105
                                                     =========      =========




The accompanying notes are an integral part of these statements.



<PAGE>


                            Telebyte Technology, Inc.

                           BALANCE SHEETS (continued)

                                  December 31,






           LIABILITIES AND SHAREHOLDERS' EQUITY         1995           1994
                                                      ---------      --------

CURRENT LIABILITIES
    Accounts payable                                $  133,068      $  141,217
    Accrued expenses                                   119,890          63,212
    Current maturities of long-term debt                60,620          47,126
                                                     ---------       ---------

         Total current liabilities                     313,578         251,555



LONG-TERM DEBT, less current maturities              1,046,325       1,089,332


COMMITMENTS AND CONTINGENCIES


SHAREHOLDERS' EQUITY
    Common stock - $.01 par value; 9,000,000 
      shares authorized; 1,636,566 shares issued;
      1,501,566 and 1,511,566 shares outstanding
      in 1995 and 1994, respectively                    16,366         16,366
    Capital in excess of par value                   2,751,988      2,751,988
    Accumulated deficit                               (590,886)      (692,478)
    Treasury stock -  135,000 and 125,000 shares
       at cost, in 1995 and 1994, respectively         (85,945)       (77,658)
                                                     ----------     ----------
                                                     2,091,523      1,998,218
                                                     ----------     ----------
                                                    $3,451,426     $3,339,105
                                                     =========      =========








The accompanying notes are an integral part of these statements.


<PAGE>


                            Telebyte Technology, Inc.

                             STATEMENTS OF EARNINGS

                             Year ended December 31,



                                                 1995                1994
                                             -------------       -------------

Net sales                                     $3,758,953           $3,789,972
Cost of sales                                  1,683,678            1,743,874
                                               ---------           ----------

        Gross profit                           2,075,275            2,046,098
                                               ---------            ---------

Operating expenses
    Selling, general and administrative        1,642,977            1,505,515
    Research and development                     282,172              248,993
                                              ----------           ----------
                                               1,925,149            1,754,508
                                               ---------            ---------

         Operating profit                        150,126              291,590
                                              ----------           ----------

Other income (expense)
    Interest income                               20,352               12,518
    Rental income                                 48,195               36,146
    Interest expense                            (115,081)            (133,283)
                                               ---------             ---------
                                                 (46,534)             (84,619)
                                               ----------           ----------
        
 Earnings before income taxes                    103,592               206,971

Income tax provision (benefit)                     2,000               (75,000)
                                               ----------           ----------

         NET EARNINGS                         $  101,592            $  281,971
                                                =========            =========

Earnings per common share                           $.07                  $.18
                                                     ===                   ===

Weighted average number of common
    shares outstanding                         1,511,292             1,526,242
                                               =========             =========





The accompanying notes are an integral part of these statements.



<PAGE>



                            Telebyte Technology, Inc.

                        STATEMENT OF SHAREHOLDERS' EQUITY

                     Years ended December 31, 1995 and 1994




<TABLE>
<CAPTION>

                                 Number of                     Capital in                       
                                  shares          Common        excess of      Accumulated     Treasury                            
                                  issued           stock        par value       deficit          stock            Total
<S>                              <C>               <C>          <C>            <C>            <C>                <C>              
Balance at January 1, 1994                         $16,366                                    $(55,000)
                                 1,636,566                      $2,751,988     $ (974,449)                       $1,738,905

Purchase of treasury stock                                                                     (22,658)             (22,658)

Net earnings                                                                       281,971                          281,971
                                -----------     -----------     ----------      ----------   --------------       ----------

Balance at December 31, 1994     1,636,566          16,366       2,751,988       (692,478)      (77,658)          1,998,218

Purchase of treasury stock                                                                       (8,287)             (8,287)

Net earnings                                                                       101,592                          101,592
                               ------------      ---------      -----------     ----------   --------------       ----------

Balance at December 31, 1995     1,636,566         $16,366      $2,751,988       $(590,886)    $(85,945)         $2,091,523
                                 =========         =======       =========        ========      ========          =========



<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>



<PAGE>


                            Telebyte Technology, Inc.

                            STATEMENTS OF CASH FLOWS

                             Year ended December 31,



                                                          1995         1994
                                                      -----------  -----------

Cash flows from operating activities
    Net earnings                                        $101,592     $ 281,971
    Adjustments to reconcile net earnings to net
       cash provided by operating activities
          Depreciation and amortization                   76,193        58,874
          Deferred income taxes                                        (80,000)
          Provision for losses on accounts
              receivable                                  (1,633)       10,466
          (Increase) decrease in operating assets
              Accounts receivable                        (51,312)       56,819
              Inventories                                 88,153      (181,663)
              Prepaid expenses and other                  58,528       (59,285)
              Other assets                                                 224
          Increase (decrease) in operating liabilities
              Accounts payable                            (8,149)      (47,043)
              Accrued expenses                            56,678       (15,314)
                                                         ---------    ---------

         Net cash provided by operating activities       320,050        25,049
                                                       ---------     ---------

Cash flows from investing activities
    Additions to property and equipment                 (112,161)      (84,880)
                                                        ---------     ---------

         Net cash used in investing activities          (112,161)      (84,880)
                                                        ---------     ---------

Cash flows from financing activities
    Principal payments of long-term debt                 (55,770)      (44,460)
    Purchase of treasury stock                            (8,287)      (22,658)
    Proceeds from long-term debt                          26,257        20,818
                                                       ----------     ---------

         Net cash used in financing activities           (37,800)      (46,300)
                                                       ----------     ---------

         NET INCREASE (DECREASE) IN CASH
              AND CASH EQUIVALENTS                        170,089     (106,131)

Cash and cash equivalents at beginning of year            439,377      545,508
                                                        ---------     --------

Cash and cash equivalents at end of year                $ 609,466    $ 439,377
                                                         ========     ========




The accompanying notes are an integral part of these statements.



<PAGE>


                            Telebyte Technology, Inc.

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 1995 and 1994



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Telebyte Technology, Inc. (the "Company") designs, manufactures and markets
     electronic  data  communications   products.  The  Company's  products  are
     primarily sold to end-users,  domestic  dealers and  distributors,  foreign
     dealers and distributors and original equipment manufacturers.  The Company
     does not  depend  upon  sales to a single  customer  or a limited  group of
     customers and there were no sales to a single  customer during the last two
     years exceeding 10% of net sales. The Company operates in a single business
     segment  and has no foreign  operations.  Export  sales were  $445,000  and
     $478,000 in 1995 and 1994, respectively.

     A summary of the significant  accounting policies  consistently  applied in
the preparation of the accompanying financial statements follows:

     1.  Inventories

         Inventories  are stated at the lower of cost  (first-in,  first-out) or
market.

     2.  Property and Equipment

         Property  and   equipment   are  stated  at  cost,   less   accumulated
         depreciation.  Depreciation is computed on the straight-line basis over
         the  estimated  useful  lives of the  assets,  which  are 35 years  for
         building and improvements and 5 years for equipment.

     3.  Income Taxes

         Deferred income taxes are recognized for temporary  differences between
         financial  statement and income tax bases of asset and  liabilities and
         loss  carryforwards  for which  income tax  benefits are expected to be
         realized in future years. A valuation allowance has been established to
         reduce the  deferred tax assets as it is more likely than not that all,
         or some portion, of such deferred tax assets will not be realized.  The
         effect on  deferred  taxes of a change in tax  rates is  recognized  in
         income in the period that includes the enactment date.

     4.  Earnings Per Share

         Earnings per share of common  stock are based on the  weighted  average
         number of shares of common stock  outstanding  during the year.  Common
         stock  equivalents  are not material to the calculation of earnings per
         share.


<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994



NOTE A (continued)

     5.  Statements of Cash Flows

         For purposes of the  statements  of cash flows,  the Company  considers
         highly  liquid  cash  investments  with an  original  maturity of three
         months or less to be cash  equivalents.  The Company  paid  interest of
         $115,871  and  $134,235  and income taxes of $2,208 and $11,552 in 1995
         and 1994, respectively.

     6.  Revenue Recognition

         Revenue is  recognized  from sales when a product is  shipped.  Service
         fees are recognized upon the completion of the related service.

     7.  Use of Estimates

         In preparing financial statements in conformity with generally accepted
         accounting  principles,  management  is required to make  estimates and
         assumptions  that affect the reported amounts of assets and liabilities
         and the disclosure of contingent  assets and liabilities at the date of
         the financial statements and revenues and expenses during the reporting
         period. Actual results could differ from those estimates.


     8.  ACCOUNTING PRONOUNCEMENT NOT YET ADOPTED

          Statement  of Financial  Accounting  Standards  No. 123 ('SFAS  123'),
     'Accounting  for  Stock-Based  Compensation,'  is required to be adopted in
     1996  and  allows  for a  choice  of the  method  of  accounting  used  for
     stock-based  compensation.  Entities may use the  'intrinsic  value' method
     currently based on APB 25 or the new 'fair value' method  contained in SFAS
     123. The Company intends to adopt SFAS-123 in 1996 by continuing to account
     for stock-based compensation under APR 25. As required by SFAS 123, the pro
     forma  effects on net income and earning per share will be determined as if
     the fair value based method had been applied and  disclosed in the notes to
     the financial statements.

NOTE B - INVENTORIES

     Inventories consist of the following at December 31:

                                                   1995               1994
                                               -------------       ------------

        Purchased components and materials        $521,082           $563,568
        Work in process                            171,230            180,156
        Finished goods                             271,592            308,333
                                                   -------         ----------

                                                 $ 963,904         $1,052,057
                                                  ========          =========




<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994


NOTE C - PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at December 31:

                                                    1995              1994
                                                 ----------        ----------

        Land                                    $  300,000       $   300,000
        Building and improvements                1,024,583         1,024,583
        Equipment                                  454,754           342,593
                                                 ---------        ----------

                                                 1,779,337         1,667,176
        Less accumulated depreciation              580,875           508,882
                                                 ---------        ----------

                                                $1,198,462        $1,158,294
                                                 =========         =========


NOTE D - DEBT

     1.  Line of Credit Facility

         The Company has an agreement with a financial institution,  expiring in
         July 1996, which provides the Company with a line of credit facility of
         up to $1,000,000  based on eligible  accounts  receivable and purchased
         components and materials and finished goods inventories of the Company,
         as defined in the agreement.  Borrowings  under the line of credit bear
         interest  at the  bank's  specified  prime  rate  plus  .75%  (9.25% at
         December 31, 1995). There was no outstanding  balance against this line
         at December 31, 1995.

     2.  Long-Term Debt

         The  Company's  first  mortgage  note is  collateralized  by  land  and
         building and the other notes payable are  collateralized  by equipment.
         The  remaining  unpaid  mortgage  note  balance at December 31, 1995 is
         payable in equal monthly installments of $12,484 (inclusive of interest
         at 10%)  with a  maturity  date  of June  2008.  The  interest  rate is
         computed  based on a 2.75%  increment  over the bank's  prime  interest
         rate,  however,  such rate cannot be less than 10% and is  recalculated
         every  three  years.  Financing  and other  costs  aggregating  $85,122
         incurred in connection  with the  acquisition  of real property and the
         refinancing  of mortgage  debt are stated at cost,  net of  accumulated
         amortization  of $39,847  and  $35,647 at  December  31, 1995 and 1994,
         respectively,  and are included in "Other  assets" in the  accompanying
         balance sheets.  Amortization is provided on a straight-line basis over
         the life of the mortgage note of 20 years.


<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994


NOTE D (continued)


         Long-term debt is summarized as follows at December 31:

                                                        1995          1994
                                                     -----------   -----------

        First mortgage note payable to bank in
            equal monthly installments, including
            interest, through June 2008               $1,067,501    $1,108,549
        Notes payable to bank in equal monthly
            installments, including interest at 9%
            to 10%, through February 1998                 39,444        27,909
                                                       ---------    ----------

                                                       1,106,945     1,136,458

        Less current maturities                           60,620        47,126
                                                       ---------    ----------

                                                     $ 1,046,325    $1,089,332
                                                      ==========     =========

Aggregate  maturities of long-term  debt as of December 31, 1995 are as follows:

                              1996                       $60,620
                              1997                        65,724
                              1998                        63,752
                              1999                        60,787
                              2000                        67,152
                              Thereafter                 189,641
                                                       ---------

                                                      $1,107,676
                                                       --------- 




<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994


NOTE E - EMPLOYEE BENEFIT PLANS

     The Company  sponsors an employee  investment  savings 401(k) plan to which
     both the Company and  employees  contribute.  Employer  contributions  of
     $ 7,172 and $8,317 were made to the plan in 1995 and 1994, respectively.

     The Company  maintains  deferred  compensation  agreements with several key
     officers,  whereby the officers will receive a defined amount approximating
     30% of their 1990 base salary for a period of 10 years after  reaching  age
     65. The deferred  compensation  plans are funded through life insurance and
     are being provided for currently. The expense charged to operations in 1995
     and 1994 for such future  obligations  was  approximately $ 13,400 for each
     year.


NOTE F - INCOME TAXES

     The provision (benefit) for income taxes is summarized as follows:

                                                    1995             1994
                                                 ----------       ----------

         Current
             State                               $  2,000         $   5,000
         Deferred                                                   (80,000)
                                                 --------           --------

                                                 $  2,000          $(75,000)
                                                =========           ========

The actual income tax expense differs from the Federal statutory rate as follows

<TABLE>
<CAPTION>
                                                       1995                                 1994
                                             ---------------------------         ---------------------------
                                              Amount               %              Amount              %
        <S>                                   <C>                 <C>              <C>                <C>                  
        Federal statutory rate                $ 35,200            34.0%            $70,400            34.0%
        State income taxes, net of Federal
          income tax benefit                     1,300             1.2               3,300             1.6
        Officers' life insurance                 3,900             3.7               4,500             2.2
        Other                                      900              .9               1,800              .8
        Change in valuation allowance                                              (80,000)          (38.6)
        Benefit of net operating loss
            carryforward                       (39,300)          (37.9)            (75,000)          (36.2)
                                              ---------        -------              ------            ----

                                            $    2,000             1.9%           $(75,000)          (36.2)%
                                              =========        ========              ======            ====

</TABLE>


<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994



NOTE F (continued)

     At December 31, 1995, the Company has net operating loss  carryforwards and
     tax credits expiring from 2001 through 2006 of approximately $1,050,000 and
     $79,000,  respectively,  available to reduce Federal income taxes resulting
     from future operations.

     The tax effects of  temporary  differences  which give rise to deferred tax
assets (liabilities) at December 31, 1995 and 1994 are summarized as follows:

                                                      1995           1994
                                                   ---------       ---------

        Deferred tax assets
            Net operating loss carryforwards      $ 420,000       $ 452,000
            Investment tax credit carryforwards      79,000          79,000
            Inventory valuation                      21,000          23,000
            Allowance for doubtful accounts           6,000           8,000
                                                  ---------      ----------
                      Gross deferred tax assets     526,000         562,000
        Deferred tax liabilities
            Excess tax over book depreciation      (145,000)       (137,000)
                                                    --------       --------

        Net deferred tax assets before
            valuation allowance                     381,000         425,000

        Valuation allowance                        (301,000)       (345,000)
                                                   --------         -------

                      Net deferred tax assets    $   80,000      $   80,000
                                                   =========       =========



NOTE G - STOCK OPTION PLANS

     In 1983,  the Company  adopted a plan which  provided  for the  granting to
     officers and key employees of the Company of incentive  stock  options,  as
     defined in the  Internal  Revenue  Code,  for the  purchase of a maximum of
     250,000 shares of the Company's common stock.  Under the terms of the plan,
     the options, which expire ten years after grant, are exercisable at a price
     equal to the fair market  value of the stock at the date of the grant.  The
     options  become  exercisable  in  four  annual   installments,   the  first
     installment occurring within one year after the date of grant.


<PAGE>


                            Telebyte Technology, Inc.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                           December 31, 1995 and 1994


NOTE G (continued)

     In 1994, the Company  adopted the 1993 Stock Option Plan (the "1993 Plan"),
     which  provides  for the  granting to  directors  and key  employees of the
     Company of incentive stock options and  nonqualified  stock options for the
     purchase  of a maximum of 100,000  shares of the  Company's  common  stock.
     Under the terms of the 1993 Plan, the options, which expire ten years after
     grant,  are  exercisable  at a price equal to the fair market  value of the
     stock at the date of the grant for  incentive  stock  options and at prices
     determined by the Board of Directors for  nonqualified  stock options,  and
     become  exercisable in accordance with terms established at the time of the
     grant.  At December 31, 1995, the Company had reserved  70,000 shares under
     the 1993 Plan.

     The  following is a summary of activity with respect to stock options under
the plans:

                                                 Number         Option price
                                                of shares         per share

      Outstanding at January 1, 1994             55,250        $.3125 to $1.03
          Granted                                15,000              1.03
          Expired                                (4,000)              .3125
                                                 ------
      Outstanding at December 31, 1994           66,250        $.3125 to $1.03
          Granted                                15,000              2.04
          Expired                                (4,500)       $.3125 to $.75
                                                -------

      Outstanding at December 31, 1995           76,750        $.3125 to $2.04
                                                 ======
      Balance exercisable at December 31, 1995   61,750        $.3125 to $2.04
                                                 ======


NOTE H - COMMITMENTS AND CONTINGENCIES

     The Company  leases certain  equipment  used in its operations  pursuant to
     noncancellable  operating  leases  expiring  through  October 1998.  Rental
     expense  for such  equipment  was  $15,505  and  $18,552  in 1995 and 1994,
     respectively.  The minimum rental  commitments  under these  noncancellable
     operating leases, at December 31, 1995, are summarized as follows:

                              1996              $ 17,015
                              1997                14,147
                              1998                 9,391
                                                 -------

                                                $ 40,553